* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
By Ritvik Carvalho
LONDON, June 15(Reuters) - Sterling sank against the dollar and euro on Monday as fears of a second wave of coronavirus hit risk sentiment and global markets, with investors also nervous ahead of a key meeting on Brexit negotiations.
A fresh coronavirus outbreak in China and rising infection numbers in the United States - even as major economies have begun lifting lockdowns - put financial markets on the backfoot at the start of the week, with selling of stocks and risk currencies across the board.
The pound also took a beating, falling for a third straight session, and down 0.3% against the dollar at $1.2501 by 0751 GMT. In Asian tradnig hours earlier, it fell as low as $1.2455 - its lowest since June 1.
It also fell 0.2% to the euro, at 81.91 pence.
“The pound remains highly sensitive to changes in the external risk environment and is likely to continue trading on a corrective path lower in line with cross-asset markets,” said Viraj Patel, FX and global macro strategist at Arkera.
“The curveball provided by intensified Brexit talks today is unlikely to offset the gloomy outlook - however we expect the pound to remain sensitive to any headline Brexit risks over the coming weeks.”
British Prime Minister Boris Johnson will join a video-conference with EU leaders on Monday, keen to make headway in negotiations on a future EU-UK relationship, but officials in Brussels expect no breakthrough in the Brexit deadlock.
Britain’s Mail on Sunday reported that Johnson would use the meeting to “bang the table”, pressing the 27-nation European Union to aim for an agreement by the end of the summer and not to use the coronavirus pandemic as an excuse to drag its feet.
However, officials in Brussels said the afternoon discussion with European Commission President Ursula von der Leyen and the heads of the European Council and European Parliament was a long-scheduled stock-taking exercise, not a negotiation.
“We are sceptical that the two sides will find a breakthrough in the deadlocked negotiations especially on a possible extension of the transition period, which expires at the end of the year,” said Lars Sparresø Merklin, senior analyst, FX strategy in a note to clients.
“This extension needs to be agreed upon before 1 July if the two sides should be able to extend the transition period at a later stage in the fall.”
Speculators reduced their net short position on the pound in the week to last Tuesday, data from the Commodity Futures Trading Commission showed.
This week, investors also will look ahead to the Bank of England’s meeting on Thursday, where it is expected to announce a fresh increase of at least 100 billion pounds ($126 billion) in its bond-buying firepower.
Bank of England Governor Andrew Bailey said the British central bank had to be ready to do more to help the country’s economy because of the risk of long-term damage caused by the coronavirus shutdown. (Reporting by Ritvik Carvalho Editing by Mark Heinrich)